Mobile World Congress (MWC)-Expectations in 2009

BARCELONA-The 2009 edition will be the 3rd MWC I will be attending, but am sure that the flavour of this year's event will be quite distinguishable from that of previous editions.

Last year's MWC was undoubtedly the year with the greatest emphasis on mobile content, with the Content Zone area expanding greatly compared to earlier years. It was also the year which marked the foray of new players in the handset market, such as Asus and Garmin.

This year is seems that the organisers have made a more earnest effort to showcase innovation at the event, with greater floor space dedicated to both local and international mobile start-ups. This is absolutely fundamental, as innovation is unlikely to come from the existing incumbents, who are dragged down by declining revenues, limited credit facilities and unhappy shareholders.

But, the mobile marketplace is a complex ecosystem, and innovation will only flourish if most stakeholders make more than just a token effort to support new ideas. Key to this are the Mobile Network Operators (MNOs), whose essential support role has been hankered by a blinkered approach to innovation (we want it, but won't risk anything to get it).

Some signs of change are emerging, with MNOs on the acquisition trail for new concepts they understand (view Zyb's acquisition by Vodafone for example). While this buying-in of innovation is great (it supports many an exit strategy documented in start-up business plans) it doesn't per se do much to support the launch of new, daring services (such as LBSs).

My hope for the MWC this year is to see MNOs recognising that opening up their network to innovative startups is not only commendable, but that it is the only way that they can maintain sustainable growth in the mid to long term and drive new users and greater usage to their increasingly core data package offerings.

"Mobile Crunch" -New rules for Mobile Start-ups in today's economy

Extremely well-timed Mobile Monday Barcelona session last night focussed on Mobile Start-ups in Times of Crisis and how to manage through a financial and/or economic downturn.

Panelists Oscar Farres from Debaeque Capital, Sergio Perez from Caixa Capital Risc and Marcel Rafart, from Nauta Capital, gave their take on the current situation and offered guidance to young mobile start-ups.

Their main points:

• The rules of engagement have changed -risk profiles have shot up and banks are retreating to safe investments, those that generate revenue or profit already (but preferably both). Fundamentally, for young start-ups the message was 'forget the banks'.
• Start-ups should outsource or plan to outsource whatever activity can be externalised, as these leverages the company's cost base and reduces risk from an investor point of view.
• Focus on burn rates-cut out any expenditure that is not strictly essential
• These are tough times, but also times of opportunity for those companies able to stick it out throughout the crisis.

As Rudy de Waele put it eloquently, 5 years ago there was no Facebook or Twitter or myspace...times of crisis allow for a natural selection of only the very best concepts and businesses. Start-ups should really ask themselves what unique benefit do they offer that no-one else offers?

I asked the VC guys what % ROI they expected to still consider making an investment and the rule of thumb was 25-30% y-o-y.

Interestingly, Oscar Farres highlighted what he considered to be the big growth opportunities in the market (independently of recessionary pressures) and Location based services was up there amongst the chose few sectors.

Why now is a good time to invest in mobile start-ups

Global financial meltdown...credit crunch...government bailout...fiscal tightening...all these words will be very familiar to everyone following the unfolding of financial events on both sides of the atlantic. The picture for stock holders and bond holders, from private investors to pension plan owners, is not pretty.

That small proportion of wealthy individuals around the world are faced with some stark choices for making the most of their capital...look to preserve it by adopting a risk-averse approach (and buy gold bullion) or sit on their cash and ride out the storm, wary of potential bank collapses.

Neither of these two options offer the true capitalist a decent return. But, as always, there is money to be made in times of crises and parts of the economy that will fare better than others. The mobile sector is by no means immune to the downturn, and while operator revenues are likely to stay flat (guarded by inelastic demand), other parts will grow.

Mobile web is at an inflection point in terms of its global growth, moving from niche to mainstream, from Mobile 1.0 to Mobile 2.0, and there will be a number of competent start-ups that, though small today, will be huge tomorrow.

The great news is that the relative risk of investing in these start-ups has decreased compared to a year ago, given the drastically reduced equity returns from quoted companies. In addition, many of these quoted companies have either cut or withdrawn their dividend, and so look and feel more like growth stocks.

Fancy a flutter on an equity investment? My advice is, look at the opportunities out there to fund a mobile web start-up: it will be not much riskier than a blue-chip investment, will certainly be more fun to follow and, you never know, could be your next mobile equivalent of Facebook.